Cryptocurrency exchange owner's death blocks $140m access to funds

  • Over $140m of cryptocurrencies are trapped in limbo following the death of Gerald Cotten, the owner of Canadian cryptocurrency exchange QuadrigaCX.

    What happens to your passwords and access to your online accounts when you die? Banks have the authority to handle assets of the deceased on behalf of their beneficiaries and many websites will transfer access to family members in order to let them access critical documents. But what about the private keys and passwords in a cryptographically secured computer system?

    That's the dilemma currently being faced by Canadian cryptocurrency exchange Quadriga. The organisation's owner Gerald Cotten died in December 2018, and the laptop on which he did company work has been cryptographically secured due to the sensitive nature of his work on the exchange. No-one has been able to access the laptop since Cotten's death, and the results have been disasterous.

    Among other things, the laptop contains the private key to the exchange's master cryptocurrency wallets. Anyone can deposit money into the exchange by using a wallet's public key, but withdrawals have to be processed using the private key to ensure only the owner of a wallet can spend the money in it. Losing that key means that around $140m of cryptocurrencies such as Ethereum are now trapped in an account that nobody can access.

    The exchange has shut down operations and issued a statement that it's been issued "an order for creditor protection in accordance with the Companies' Creditors Arrangement Act (CCAA)," an arrangement that is at best a stay of execution. It will give the business time to have third party organisation Ernst & Young Inc. investigate the company's debt obligations and figure out how to meet them.

    Sources: BBC News, QuadrigaCX

    About the author

    Brendan is a Sync NI writer with a special interest in the gaming sector, programming, emerging technology, and physics. To connect with Brendan, feel free to send him an email or follow him on Twitter.

    Got a news-related tip you’d like to see covered on Sync NI? Email the editorial team for our consideration.

Share this story